Luxury housing market is stirring in Sydney

Sunday

May 26, 2013 at 6:00 AM

By Nichola Saminather BLOOMBERG NEWS

Sydney’s luxury-home market is reviving, with two harborside mansions — one of which was offered for more than A$50 million ($51 million) -- selling in the past month and realtors reporting a jump in buyer inquiries.

Publisher Deke Miskin and his swimsuit-designer wife, Eve, sold their nine-bedroom mansion Altona, which was on the market for two years and for which they turned down an offer of A$59 million at one point. Television executive Bruce McWilliam sold a house dubbed Bang & Olufsen because it resembles the sound system made by the Danish company.

Record-low interest rates and the wealth effect of a stock market rally are boosting buyer confidence, according to researcher Australian Property Monitors. Prices are also more affordable — houses in the top 20 percent of the market in Australia’s major cities are about 5 percent below a peak in April 2010, according to Brisbane-based researcher RP Data.

“In the last couple of months, buyers have started coming out of the woodwork,” said Perth-based William Porteous, who brokered Australia’s most expensive home sale for A$57.5 million in the Perth suburb of Mosman Park in 2009. “People taking positions now will do well in the next 18 months.”

The two latest sales in Sydney’s eastern suburbs take to four the number of homes sold for more than A$10 million this year to April 30. That compares with six such transactions across the city in 2012, according to broker LJ Hooker Corp. Inquiries on A$6-million-plus properties have quintupled from a year ago, said Michael Finger, principal at real estate firm Ray White Group’s Double Bay franchise in the eastern suburbs.

People selling homes “are definitely reducing their expectations,” Finger said in a telephone interview. “But there’s not a lot more downside and the smarter money is saying ‘I may as well get in.’ ”

Hong Kong, the world’s most expensive housing market, saw the average luxury home price jump 8.7 percent in 2012 from 2011, compared with no change in Sydney, according to London-based broker Knight Frank LLP. In Hong Kong, $1 million bought 19 square meters (205 square feet), while the same amount got 38 square meters in Singapore, Asia’s second-priciest market, and 44 square meters in Sydney, the data shows.

Wing Tai Holdings Ltd. Chairman Cheng Wai Keung last month listed a house in the heart of Singapore for a record S$300 million ($244 million). He’s seeking to beat the current S$87.5 million record even as the city-state’s government steps up measures to curb price growth including higher stamp duty payments and increased taxes on luxury homeowners.

Chaimovich Investments, which lists Melbourne-based Ding Xiuzhen as sole director, lodged a hold on Altona on March 28 preventing other registrations on the property, according to a filing held by the New South Wales Land Titles registry. The sale price hasn’t been disclosed and Chaimovich couldn’t be reached for comment.

The house, which has views of the Harbour Bridge and Opera House and has been rented by holidaying celebrities including Bono and Elle Macpherson, was listed by Sydney-based broker Whelans Real Estate with an asking price of A$55 million. Last September, it had a $57 million price tag on broker Coldwell Banker’s U.S. website. “The market’s certainly weaker than what it was and there are people out there now starting to take advantage,” Simon Feilich, director at Sydney-based valuation firm Dyson Austen Advisory, said in a telephone interview. “There’s been strong growth in equity markets and that provides confidence.”

The Bang & Olufsen house, which like Altona is in the suburb of Point Piper, was bought by Qiu Yafu, chairman of Chinese company Shandong Ruyi Scientific & Technological Group Co., the Australian Financial Review said on May 8. The five-bedroom home sold for A$33 million, the Domain property website reported on April 21. Clint Ballard, principal at Ballard Property, which sold the home, declined to comment, citing confidentiality agreements.

The house got its nickname after singer Elton John likened its tinted-glass windows to the Danish company’s sound system, according to a Sydney Morning Herald newspaper report April 22.

Asian buyers are helping drive the recovery at the top end, said Bill Malouf, principal at LJ Hooker’s franchise in Double Bay, a harborside suburb next to Point Piper. Malouf’s recent sales include a six-bedroom house in Point Piper with a wine cellar and a separate apartment.

The Australian government’s introduction last November of a visa that provides permanent residency to foreigners investing at least A$5 million over four years will draw in more Chinese investors, he said.

The government received 170 applications for the new visa as of April 30 and 94 percent of those were from Chinese nationals, according to Department of Immigration spokesman Sandi Logan. One application, by a Chinese citizen, has been approved, a May 3 government media release said. While housing isn’t a qualifying investment, visa holders, as temporary residents, can purchase homes.

Neill Miller, an information technology entrepreneur and private-equity investor, in February sold his five-bedroom waterfront house with its own cinema and gym in Rose Bay, another eastern Sydney suburb, for more than A$30 million to an undisclosed buyer, according to a person familiar with the sale.

Australia’s central bank gave the housing market a boost, reducing its benchmark interest rate by 25 basis points to a record-low 2.75 percent on May 7. All four major lenders passed on the rate cut in full to mortgage holders, with Australia & New Zealand Banking Group Ltd. reducing its home-loan rate by an additional 2 basis points today.

Home prices across the nation’s biggest cities climbed 2.3 percent this year to April 30, following declines of 0.4 percent in 2012 and 3.8 percent in 2011, according to RP Data.

“Prestige property reflects prosperity in the economy, and as a consequence of that, it tends to have higher peaks and lower troughs than the middle and budget markets,” Andrew Wilson, senior economist at APM, said in a telephone interview.

The S&P/ASX 200 Index, Australia’s benchmark stock gauge, is near a five-year high, up 21 percent in the past 12 months.

Still, a more subdued recovery in the broader housing market and pockets of weakness in the economy mean prices won’t return to their 2010 peak, according to APM and Ray White. The Australian dollar’s longest stretch above parity with the U.S. dollar since it was freely floated in 1983 is hurting manufactures, while consumer spending remains sluggish.

The RBA today lowered its inflation outlook, citing weakness outside the resources industry as mining investment peaks this year, and the currency’s strength.

“It’s a slow process, and I don’t think the prestige market, especially in Sydney, will recover to its previous peak,” APM’s Wilson said. “Everything would have to go right for people to be willing to pay those stratospheric prices, and the jury’s still out on whether that’ll come through.”